Silver prices on the Multi Commodity Exchange (MCX) witnessed a sharp and sudden correction, crashing from recent highs near ₹4.20 lakh per kg to around ₹3.55 lakh per kg, marking a steep decline of nearly 15% from the peak in a short span.
The fall comes after silver had surged to record highs earlier this week, driven by global safe-haven demand, supply tightness, and spillover strength from gold. However, multiple factors combined to trigger a rapid unwind.
What caused the silver crash?
1. Profit booking after a parabolic rally
Silver had rallied aggressively over the past few sessions, touching all-time highs both globally and on MCX. Prices had moved far ahead of short-term fundamentals, prompting traders and investors to book profits, leading to heavy selling pressure.
2. Cooling global silver prices
International silver prices, which had surged close to the $120 per ounce mark, saw signs of consolidation and mild pullback. As MCX silver had been trading at a steep premium of over 16% to global prices, even a modest correction overseas triggered an outsized reaction in domestic futures.
3. Unwinding of elevated India premium
Data showed Indian silver prices were trading at one of the highest premiums over COMEX and LBMA prices in recent years. As global prices stabilised, this premium began to compress, accelerating the fall on MCX.
4. Strong volatility across metals
The correction in silver came amid extreme volatility across precious and base metals, following record highs in gold and copper. Once risk appetite shifted and prices started correcting, leveraged positions in silver were among the first to be unwound.
5. Margin pressure and stop-loss triggers
The sharp intraday move likely triggered margin calls and stop-losses, amplifying downside momentum. Silver is a highly volatile commodity, and sharp corrections are common after vertical rallies.
Bigger picture
Despite the sharp fall, silver prices are still well above levels seen earlier this year, after gaining nearly 60% year-to-date at the peak. Market participants note that such corrections are typical after rapid, momentum-driven rallies.
Going forward, traders will closely track:
- Direction of global silver prices
- Movement in gold, which often sets the tone
- Changes in India’s premium over global markets
- Broader risk sentiment and dollar movement
For now, the silver market has shifted from euphoria to consolidation, with volatility expected to remain elevated in the near term.
